Science Editor, The Age

"Any kind of cuts to the CSIRO will translate to a lack of opportunity. It's ... a knock-on effect": Michelle Gallaher, chief executive of the BioMelbourne Network. Photo: Louie Douvis

Cuts to the CSIRO will have long-term and detrimental effects on Australia's ability to innovate and form partnerships with leading companies, it has warned.

As the country's peak science organisation, the CSIRO generated $37.5 million in licence fees and royalties last financial year and $278.5 million in 2011-12 off the back of wireless technology royalties.

Home-grown inventions developed at CSIRO range from cotton seeds to contact lenses. Much of the income is returned to its research budget.

CSIRO general manager of business development and commercialisation Jan Bingley said the organisation's capacity to generate income risked being compromised if rumoured cuts were implemented.

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She also said changes to funding arrangements could undermine the federal government's ''open for business'' stance, with industry partners reluctant to sign on in unstable environments.

On Monday, it was revealed the organisation was bracing for a budget cut of up $150 million, or more than 20 per cent of government funding.

Much of the royalties stem from research projects that began decades ago. Among them is wireless technology that has produced $420 million in the past five years and disease and pest-resistant cotton seed varieties used in 95 per cent of Australia's cotton crops.

Multinational partners include Bayer and Monsanto as well as local partners Cotton Seed Distributors. Royalties from cotton seeds range between $10 to $20 million a year, depending on factors such as drought.

''A lot of the commercial outcomes we are getting now are based on investment we were able to make in the science using federal government taxpayer money in the past,'' Ms Bingley said. ''If we don't have access to that, then it makes it that much harder to innovate because it's difficult to get industry to pay for things so early on in development.''

Michelle Gallaher, chief executive of the BioMelbourne Network, a Victorian association for the biotech sector, said much of Australia's success in the field was founded on CSIRO research. It was also helping at least 50 Australian biotech companies to develop and commercialise their research.

''Any kind of cuts to the CSIRO will translate to a lack of opportunity. It's … a knock-on effect.''